As California becomes more aggressive in pushing for cleaner-burning fuels, the state’s farmers are expected to plant more corn where they typically cultivate other crops.
The increased focus on corn -- from which ethanol is produced -- could mean fewer acres planted for tomatoes, wheat and other crops. That would lead to higher prices for tomato sauce, bread and the feed corn used by ranchers, potentially boosting the prices of turkey and chicken at the grocery store.
Gov. Arnold Schwarzenegger has called for California refiners to cut the carbon content of vehicle fuels 10% by 2020. Using cleaner-burning fuel would help reduce the amount of atmosphere-warming gases produced in the state, the world’s 12th-largest emitter of greenhouse gases.
Alternative fuels supply 4% of California’s transportation needs. Schwarzenegger’s executive order could increase the state’s use of renewable fuels such as ethanol three- to fivefold, administration officials said.
His action to promote the use of biofuels was the first major step toward cutting California’s greenhouse gas emissions under a landmark bill Schwarzenegger signed last fall. Industries also are targeted under the law, which aims to reduce greenhouse gas emissions 25% by 2020.
The focus on biofuels comes amid increased demand for feed corn nationwide, driving up the cost and prompting some farmers to consider switching to a crop that mainly comes from the Midwest.
“Recently, because of ethanol production driving up the price of corn, it’s becoming more attractive to tomato growers,” said Ross Siragusa, president of the California Tomato Growers Assn.
“We’ll definitely see more farmers making the decision. It’s a lower-risk crop.”
That could mean higher prices for foods that use processed tomatoes such as salsa and sauce, he said.
Higher wheat prices led to an increase in acreage planted this year, said Bonnie Fernandez, executive director of the California Wheat Commission. But wheat farmers could shift quickly to corn in the future if they find a market for ethanol.
In turn, that would trigger higher prices for bread and other wheat products.
Most corn used by California ethanol producers, as well as some major livestock operations, is shipped by train from the Midwest at prices cheaper than it can be grown on the West Coast, said Kent Brittan, a University of California Cooperative Extension advisor.
“What’s happened now, this year, is that ethanol has put a price floor in the market. It’s up in the area where it’s profitable for California growers to grow corn,” Brittan said. “I’m thinking it’s going to stay that way because there are more ethanol plants coming on line.”
Brittan said he expected the price of corn to remain relatively high because of the increased competition between livestock and ethanol producers.
Although better prices translate into higher profits for grain farmers, they mean lower margins for livestock producers who depend on corn-based feed.
About two-thirds of the cost of raising chickens or turkeys is for feed, most of which is from corn, said Bill Mattos, president of the California Poultry Federation. He expects the price of poultry feed to double this year.